The Corporate Criminal

Why Corporations Must Be Abolished

Steve Tombs, David Whyte

• Publisher: Routledge
• Year: 2015
• eBook ISBN: 9781135264338
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

Drawing upon a wide range of sources of empirical evidence, historical analysis and theoretical argument, this book shows beyond any doubt that the private, profit-making, corporation is a habitual and routine offender. The book dissects the myth that the corporation can be a rational, responsible, 'citizen'. It shows how in its present form, the corporation is permitted, licensed and encouraged to systematically kill, maim and steal for profit. Corporations are constructed through law and politics in ways that impel them to cause harm to people and the environment. In other words, criminality is part of the DNA of the modern corporation. Therefore, the authors argue, the corporation cannot be easily reformed. The only feasible solution to this 'crime' problem is to abolish the legal and political privileges that enable the corporation to act with impunity.

1 Introducing the Corporate Criminal

DOI: 10.4324/9780203869406-1

The dominant role that corporations play in our lives makes them appear to us as a fact of life. Corporations now take credit for, and profit from, providing most of the food that we eat, the clothes we wear, the communications systems we use, the films we watch, the music we listen to and so on. What corporations do well or badly fundamentally affects our chances of a healthy life. Corporations produce the chemicals that end up in the air we breathe and the food we eat, just as they produce the drugs that seek to keep us healthy and to prolong our lives. Corporations are central to virtually all systems of child-, social or health-care, criminal justice, education, energy and transport. The presence of corporations in every aspect of our lives is so overbearing that it makes it seem as if this presence is both normal and natural. There exists, popularly and politically, a resignation to the ubiquitousness and power of the corporation as the dominant form through which the provision of goods and services is – and should, even must, be – organised across the globe.

In this context, we should not be surprised that corporations also have a major cultural impact, an aspect of corporate power that is perhaps most obvious to us as citizens but that has in fact received relatively little academic attention. Following Mathiesen (1997), we would argue that the appearance of corporations in every aspect of our lives is a key element of the ‘synoptic’ or ‘viewer’ society. The corporate public relations and advertising industries, which impose upon us a constant diet of positive images of various corporations and brands, are a central part of the corporation’s ability to assert its socially necessary and socially beneficial role (Stauber and Rampton, 1995). Yet the pervasiveness of the corporation is also upheld by what we can call the synoptic effect of corporate power. That is to say, the corporation projects itself in a way that is a reversal of the famous principle that Bentham used in prison design: the panopticon. Bentham’s panopticon was based on the idea that if prisoners are aware that they are being observed, or at least potentially being observed, at all times from a central observation tower, then they would eventually regulate their own behaviour. The principle of the synopticon is based on the idea that we are disciplined into a particular way of thinking about power when we watch the powerful, as opposed to when we are being watched by the powerful. We are constantly being watched by corporations who track our shopping habits, our online activities and even our compliance with the law. Yet at the same time, the corporation, its brands and its self-images are, in contemporary societies, ever-present as a focus of our attention and our desires (Klein, 2000; Cederstrom and Fleming, 2012). We watch, for example, the promotion from their own ranks of entrepreneurial role models, the colonisation of public space for marketing branded goods that we are expected to desire, and the creation and maintenance of the celebrities whose fame, fashion ‘sense’ and fit body shapes we are expected to crave. We do not now think anything of preferring particular brands of everything from coffee to denims. And at the same time to think of a world without our favourite brands seems like imagining a world in which there is something missing. It is this synoptic aspect of the corporate presence in our lives that significantly shapes how we think about corporations and makes the corporation appear to us as a ‘natural’ and permanent social institution.

Similarly, at the political level, it has become received wisdom for most governments around the world – whatever their formal political leaning – that, whatever its failings, the corporation is the single best way of organising the production and distribution of goods and services in the contemporary world, and, relatedly, that its efficiency is also a motor of innovation, economic progress and, ultimately, social good. Alongside this recognition or resignation are many claims, half-truths or irresistible falsehoods made to support the dominant status of the corporation. Among these are the claims that corporations are essentially benevolent institutions. It is often admitted that through their size, scope and power, corporations can generate deleterious, even destructive side-effects, but that these side-effects are marginal and peripheral rather than the inevitable consequences of corporate activity. Even if corporations appear to act illegally and irresponsibly, it is argued widely in political circles, it is corporations themselves that must lead the way or retain autonomy in reforming themselves along more socially responsible lines; only where ‘corporate social responsibility’ fails should governments step in to regulate (or enforce the law) in order to bring recalcitrant corporations into compliance. The dominant, unifying, principle in contemporary mainstream politics is that it is possible for corporations themselves to balance effectively economic progress with social welfare.

This book will argue that none of these claims withstand scrutiny. Through a combination of historical, empirical, conceptual and theoretical observation, we will show that the problematic consequences of corporate activity are not merely side-effects; they are not marginal aberrations, or deviations that are easily dealt with by either self-regulation or law enforcement. The problems caused by corporations – which seriously threaten the stability of our lives – as we shall demonstrate, are enduring and necessary functions of the corporation. Moreover, along the way, we will show that although the corporation appears as a ‘natural’ and ever-present entity, it is in fact a relatively short-lived historical construction, one entirely dependent upon state activity, continuously created and recreated through law, politics and ideology. In other words, we argue both that it is possible to imagine a world without the corporation; not only must this organisational form be challenged, but also it can be challenged. Our conclusion is that in order to improve our lives – indeed, in order to save our lives and the long-term future of human life – a challenge to the corporation is now more necessary than ever. In short, challenging corporate power in real and transformative ways is both possible and necessary. In this argument, we do not dismiss more piecemeal reform strategies per se – law, regulation, enforcement, political challenge – but we do argue that such efforts need to be placed within and judged against the wider more compelling political goal of meaningfully challenging corporate power through dismantling the corporate form itself.

The Dominant Corporation

To call the aim of fundamentally re-ordering the power structure that is the corporation ‘demanding’ is, of course, an understatement, not least because we all ‘know’ about the power of the contemporary corporation. For example, it is now commonplace for commentaries on corporate power to juxtapose the relative size of corporate economies with nation state economies and to note that the revenue of many of the largest companies exceeds that of many states. Thus, a recent report by Global Trends shows that, of the world’s 150 largest economic entities, 59 per cent are corporations and 41 per cent are nation states (Keys and Malnight, 2011). The same report notes that: Ford has higher annual earnings than New Zealand’s GDP; Shell earns more than Pakistan and Bangladesh combined (countries with a total population of 350 million people); and if Walmart was a nation state, it would be the twenty-second largest economy in the world (ibid.).

But this is perhaps not the most useful indicator of corporate power, because it only tells us, in a one-dimensional sense, that some corporations are very large. It does not tell us about how corporations are able to dominate political and economic life across the global economy. To get closer to understanding the structure of corporate economic power, we need to know more about what this complex structure of power looks like and how it operates.

Key writers have always looked to various indicators of the concentration of corporate ownership as a first step in exploring corporate power. Adolf Berle famously estimated in 1962 that ‘600 large corporations control between two-thirds and three-fourths of production today, and probably have done so for the last thirty years’ (Berle, 1962: 434). A decade later, John Kenneth Galbraith (1972) estimated that 2,000 corporations contributed to around half of gross domestic product (GDP) in the US, indicating clearly that a relatively small corporate elite was controlling the bulk of the economy.

As a very broad range of scholars have convincingly and conclusively shown, the period from the late 1970s onward, a period in which ‘neo-liberal’ economic policies prevailed, positively enhanced the structural ability of the largest corporations to accumulate profits and to expand their political and social influence (Tombs and Whyte, 2009; Pearce and Tombs, 1998). Some have also called this period ‘globalisation’ (for example, Friedman, 2000). Concentrations of corporate power have been central to neo-liberal globalisation. Indeed, as Bellamy Foster et al. (2011) argue, the key trend in the ‘globalisation’ of business may be the internationalisation of the concentration of capital; that is, the elevation of domestic oligopolies – markets or industries dominated by a small number of large corporations – that allows them to operate on an international level. Oligopolies have been encouraged by a self-fulfilling ideological logic that asserts the need for national corporations to operate on a scale and size that enables them to ‘compete’ at a ‘global’ level.

Thus, although its basic co-ordinates remain the same, this web of corporate power has become more complex in the period since Berle, then Galbraith, described the concentration of corporate power. A recent analysis by the Swiss Federal Institute of Technology (Coghlan and MacKenzie, 2011) analysed inter-connected shareholdings to show how a very small group of companies – mostly banks and financial institutions – has ownership of a large part of the global economy. This study analysed ownership relationships across 37 million companies and investors worldwide. Their analysis discovered that 43,060 transnational companies were linked by a complex network of share ownership. From this analysis, it was found that a core of 1,318 companies with interlocking share ownership controlled 20 per cent of global operating revenues. Within this group, 147 ‘super’ corporations controlled 40 per cent of the wealth in this network. This study, then, provides us with a snapshot understanding of how power in the global economy is concentrated and organised around a relatively small elite of super corporations. This snapshot in the ownership of businesses shows how economies of scale win out and that this process concentrates wealth in the hands of fewer and fewer corporations. Indeed, most investment that flows from the richer countries to the poorer countries is capital that is used to purchase and merge businesses. Around 85 per cent of foreign direct investment in the early 2000s was used in mergers and acquisitions of businesses (Globerman and Shapiro, 2005).

If the era of globalisation marks the latest in a series of merger waves, generating ever-increasing market concentration (Pearce and Tombs, 1998: 3–33), the latest of those waves ¹ saw record takeover and acquisition activity recorded in both 2006 then 2007. As Weissman has noted, merger mania has seen sector after sector dominated by a small number, and fewer, dominant actors. Most key areas of market activity are now effectively oligopolised, ² including ‘oil, food, finance, pharmaceuticals, tobacco, aircraft, defense contracting, utilities, energy, insurance, hotels, mining, media’ (Weissman, 2007).

For example, a recent survey of market dominance in agricultural production found that ‘[f]our firms control 58.2% of seeds; 61.9% of agrochemicals; 24.3% of fertilizers; 53.4% of animal pharmaceuticals; and, in livestock genetics, 97% of poultry and two-thirds of swine and cattle research’, while across the food industry generally, ‘the same six multinationals control 75% of all private sector plant breeding research; 60% of the commercial seed market and 76% of global agrochemical sales’ (ETC Group, 2013: 3). Indeed, almost every aspect of the food business is undertaken in oligopolistic markets – with specific segments of the agricultural market typically having levels of concentration on the part of the biggest four multinationals of up to 80 per cent (Hendrickson and Heffernan, 2007). ³ Oligopolistic production dominates all of the major agricultural commodities – including grains and oils, coffee, cocoa and bananas (Wilkinson, 2009). To take the latter as a typical example, five companies dominate the production and global trade in bananas, the world’s fourth most significant crop, controlling over 80 per cent of the global market (after rice, wheat and maize in terms of ensuring food security in dozens) (Fairtrade, 2009). To be clear, this has real effects. The United Nations’ World Development Report of 2008 ‘acknowledges that transnational corporations dominate a number of agricultural markets’, and that ‘growing agribusiness concentration may reduce efficiency and poverty reduction impacts’ (cited in Ching, 2008). Ching adds that

[c]oncentration widens the spread between world and domestic prices in commodity markets for wheat, rice, and sugar, which more than doubled from 1974 to 1994. A major reason for the wider spreads is the market power of international trading companies. ⁴

(Ching, 2008)

The rise to domination of a select group of supermarkets shows how this very same process is occurring at the end of the supply chain. The ‘Big Four’ UK supermarkets (Tesco, Asda, Sainsbury’s and Morrisons), even in the face of increasing competition from discount retailers, account for almost three-quarters of the market share between them (BBC, 2014). A somewhat different illustration of market dominance is provided by Lynn’s description of his walk around a US Walmart store – a company that delivers between 30–50 per cent of the products consumed in the US. There, he finds that despite the plethora of brand names, everyday items from toothpaste to beer, potato chips to bottled water are in fact produced by a handful of firms; the store itself is constructed of steel likely to be produced and supplied by one of three iron-ore companies that dominate the global market (Lynn, 2010: 7).

The financial services industry is organised as a powerful oligopoly. In the US, for example, it has been calculated that, following 25 years of merger mania that saw the numbers of commercial banks halve, ‘[b]y mid-2008 – before a rash of mergers consummated amidst the financial crash – the top 5 banks held ...

Table of contents

• Cover Page
• Half-Title Page
• Series
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Acknowledgements
• 1 Introducing the corporate criminal
• 2 Crime, harm and the corporation
• 3 Constructing the corporation
• 4 The corporation as structured irresponsibility
• 5 Controlling the corporation?
• 6 Conclusion: what is to be done about the corporate criminal?
• References
• Index